claiming protected rights without claiming pension

julie.watts_2

Please advise me
i have a pension with Zurich which i havent paid into for a number of years as i am now paying into NHS. I am 51 and have been led to believe i can claim 25% of my protected rights benefits from that pension. Zurich have sent me claim forms for the pension itself as an annuity. They have told me i cannot claim the protected rights alone?. If i transferred my pension to somewhere else would i be able to do that? and if so which company would be good?
JW

EdInvestor

To take out the 25% tax free cash on its own you need to put the pension into "income drawdown", an alternative to an annuity under which you leave your fund invested and draw a pension income directly from it. Under new rules since 2006, you now have the option of taking nil income, enabling you to take the tax free cash and leave the rest of the money invested for later.

There are two problems however.

1. Very few insurance companies will allow you to do income drawdown (even if not taking an income) with a small fund (less than around 100k). So it's usually necessary to transfer the money into a Self Invested Personal Pension (SIPP), where drawdown is easily organised for smaller funds(and you also have a much bigger choice of better investments for your fund as well.)

2.At the moment SIPPs are not allowed to accept protected rights pensions, so there is a Catch 22.But change is on the way, and this rule is likely to be dropped from October. So it's probably best to wait until then and in the meantime do a bit of research into SIPP providers that might suit you.

These three are well regarded and have low charges:

https://www.h-l.co.uk
https://www.sippdeal.co.uk
https://www.alliancetrust.co.uk

EdInvestor

http://forums.moneysavingexpert.com/showthread.html?t=679241

This thread is also worth reading - it explains the problems another poster has had trying to do the same thing with the Pru - she has ended up (accidentally) with an annuity which she didn't want and got no explanation at all from the insurance company.

One suspects there is going to be a lot more of this.

dunstonh

They have told me i cannot claim the protected rights alone?.

That is correct. Zurich can only offer you the options they have available on the contract you have. You would need to transfer it to a personal pension and then commence income drawdown.

and if so which company would be good?

There are quite a few companies that allow it and which it best will depend on your circumstances (size of fund, how you want the money to invest and if you intend to go DIY or get advice).

julie.watts_2

The value of my pension to date is under 100k would you suggest i DIY or get an ifa? thanks jw

TheAdviser

Julie there are specialist advisers that can help you. Do a Google search putting in 'pension release'. There are about 3 specialist advisers who have special arrangements that allow a pension fund lower than £50k in income drawdown.

dunstonh

julie.watts wrote: »

The value of my pension to date is under 100k would you suggest i DIY or get an ifa? thanks jw

Its up to you. If you know the providers and can do it yourself and understand the consequences then DIY is fine. If you dont then you can use an IFA.

With respect to TheAdviser (and it could just be a typo on his/her part) there are far far more advisers out there that are authorised for income drawdown. I am guess he/she meant providers.